Is your business ready for transparency? Here are 5 criteria HR can consider.

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Brief description of the dive:

  • As HR leaders face increasing pressure on corporate transparency, an October report from research and consulting firm McLean & Company says there are five criteria that determine whether an employer is ready to increase its transparency.
  • According to the firm, a company can be ready if: it has a healthy work culture that ensures psychological safety, cooperation and agreed organizational values; has a strong communication foundation; its stakeholders—especially those who control access to information, such as CEOs, executive directors, senior executives or managers—are open to sharing accurate information and are fully on board with increased transparency; there is an appropriate schedule for sharing information; and has change management initiatives and processes in place.
  • Transparency, as defined in the report, means “being open and sharing information” about decision-making and direction across the company. Pay issues are just one aspect, and levels of transparency range from zero to radical, according to McLean’s report. Companies can use different tiers for different HR programs, organizational processes and business operations, Janet Cleary, McLean’s director of research and consulting services, said in a press release. Companies can also vary levels of transparency between internal and external stakeholders, she said.

Dive Insight:

The report confirms a new reality in the workplace: Employees and others want more transparency, and transparency appears to be good for business. This means that employees are more likely to be engaged if they understand the reasoning behind leadership decisions, and those who believe their organization is transparent about HR functions are 1.4 times more likely to rate the department in human resources as highly effective, an earlier McLean report found.

“Transparency is one of those buzzwords that people like to use when trying to differentiate their company culture from others,” wrote Sarah Wilson, chief people officer at Rokt, in a 2021 HR Dive article. But that it should not undermine its importance, she emphasized.

Transparency in the workplace means working in a way that creates openness and builds trust between managers and their teams, Wilson explained. Cultural trends and human behavior have proven time and time again that people like people they can rely on and trust, she noted.

As great as the change seems, company leaders need to have discussions about transparency now, the reports say. A growing number of states and localities are requiring some form of pay transparency, sometimes upfront in a job posting, for example.

The push also comes from the employees. Lattice survey results released in June found that 51 percent of employees surveyed want their companies to share how much everyone in the organization is paid. Expectations around compensation are also high: 58 percent of employees said they seek compensation increases more than once a year, a response Lattice attributes to an uncertain economy and high cost of living.

In addition to pay transparency, employees, especially millennials and Gen Xers, demand that companies be transparent about environmental and social stewardship efforts. Although ESG reporting is increasingly important to stakeholders, it is not mandatory and only 46% of companies share ESG or corporate social responsibility reports that include key information on diversity, gender equality, carbon emissions and other issues. Nneoma Njoku, head of Labrador US, a firm focused on corporate disclosure, previously told HR Dive.

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